Food prices rose at the slowest rate since December 2024 with declines in inflation for meat, cheese, vegetables and cheese
Rob Wood, chief economist at Pantheon Macroeconomics, said:
The inflation figures will support the monetary policy committee’s highly likely decision to keep Bank Rate on hold this week and make a July hike less likely. Granted there will be another consumer prices index as well as other economic releases before the July decision, but the drop in oil prices after the US-Iran agreed an extended ceasefire had in any case led us to remove our forecast for a rate hike. We now expect Bank Rate on hold through end-2027.
Looking ahead, we still expect inflation to accelerate in the coming months as supply chain pressures feed through to goods, while energy utilities’ contribution to inflation will rise. Meanwhile, underlying services inflation—stripping out volatile and government-set prices— was still above inflation target consistent rates in May and slowing only very gradually.
While inflation was unexpectedly unchanged in May, aided by lower food costs, these figures have been surpassed somewhat by fresh hopes of easing inflation following the US-Iran peace deal.
Rising services inflation may well sharpen Bank of England fears that the Iran conflict has embedded price pressures more widely across the economy, though a deteriorating labour market will help curb any second-round effects.
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Food prices rose at the slowest rate since December 2024 with declines in inflation for meat, cheese, vegetables and cheeseRob Wood, chief economist at Pantheon Macroeconomics, said:The inflation figures will support...
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